Credit: AFP

Lebanon experiences the largest global losses in Human Development amidst its worst-ever financial crisis

A compounded crisis, consisting of an economic and financial crisis layered by the COVID-19 pandemic and a massive, deadly  explosion of the port, has not only assailed Lebanon’s macroeconomy; but has also insidiously trickled down to impede and reverse the country’s progress in Human Development. 

Lebanon has experienced the greatest global drop in the United Nations’  Human Development Index (HDI) between 2019 and 2021, reaching its lowest levels of Human Development since 2005.  

In this context, Human Development refers to expanding people’s choices, opportunities, and freedoms to live lives they value. The HDI simultaneously captures three essential capabilities in people’s lives, namely: to live long and healthy lives, to be educated and knowledgeable, and to earn an income that enables a decent standard of living. 

As such, its significant decline represents an alarming restriction on people in Lebanon’s capabilities to improve their circumstances and recover from the multilayered crisis. This threatens to trap them in cycles of insecurity and vulnerability. 

The crisis in Lebanon spurred a simultaneous decline in these dimensions, accelerated by successive governments’ long-standing neglect of Human Development in the country. While the governments that took charge of the country since the crisis implemented failed  macroeconomic and fiscal policies under a spotlight, less illuminated were their enduring shortcomings in public social spending and investment in Human Development over decades. 

Prior to the crisis, the Lebanese government’s poor investment in Human Development was supplemented by significant private and individual involvement in the provision of social services. Nonetheless, the crisis’ disruptions of the private sector and individuals’ capabilities exposed the Lebanese government’s persistent failings in prioritizing Human Development.

Shortening life expectancies

Persistent neglect of Human Development in Lebanon worsened the sting of the current crisis.

Life expectancy fell by 5 percent between 2019 and 2021, one of the worst rates in the world (which saw an active drop of 1.4%), backsliding to its 2009 levels. 

To put this into perspective, only 9 countries in the world had a greater percentage drop in life expectancy than Lebanon. This deterioration not only resulted from the pandemic’s health consequences, but mainly reflected people’s restricted access to quality healthcare amidst electricity and fuel shortages in hospitals, and deficiencies in medicines, medical supplies, and staff. 

The limited access to and weaknesses of the healthcare system were not instigated by the recent economic crisis, only precipitated by it.  Since the end of the civil war, the Ministry of Health’s role in prevention, planning and regulation remained restricted.Instead, the ministry focused almost exclusively on the provision of services.  In the past two decades, the Lebanese government’s health expenditure (41 percent of total annual health expenditure) has been consistently below that of other middle-income countries (51 percent). Out-of-pocket payments have indeed been the main funding source in the Lebanese healthcare system, and by 2019, households had to bear a third of health expenditure through direct, out-of-pocket payments.

A drop in income

Moreover, as the local currency lost 94 percent of its value, and annual inflation surpassed 200 percent, Lebanon experienced the largest drop in the world in income per person in 2021 (measured by Gross National Income (GNI) per capita) falling to less than a third of its 2019 value and regressing to less than its 1991 value, when the country was recouping from a fifteen-year civil war. 

This drastic fall in income per person, and subsequently in people’s ability to secure a decent life, mirrors the grim state of Lebanon’s labor market. According to the follow-up Labour Force Survey conducted in January 2022, the unemployment rate almost tripled between 2019 and 2022. 

Even as prices of basic goods often more than quadrupled for all consumers, salaries did not adapt, and the government failed to take effective actions to adjust the minimum wage and public sector wages. Lebanon’s labor market had, nonetheless, been deficient for decades. A confluence of factors including mismatches in the labor market, low levels of job creation, and a high prevalence of low quality and low productivity jobs, meant that Lebanon maintained a high rate of unemployment as a percentage of the labor force throughout the last decade, higher than that of other middle-income countries since 2012. 

Indeed, while Lebanon’s annual unemployment rate since 2012 was estimated by the ILO to be at 10.4 percent, middle-income countries averaged at 7.2 percent. . Social protection has been insufficient too:  the National Social Security Fund (NSSF), Lebanon’s largest employment-based provider of social services, covered only 30 percent of the labor force and an employment fund to protect those who lose their jobs or are unable to find jobs is yet to be created.

Educational sector falls short

Meanwhile, the resilience of the education system had been long impaired by limited public resources allocation, efficiency, and management. Ranging between 1.7 percent and 2.8 percent of GDP since 1992, Lebanon’s expenditure on education has fallen short of the recommended minimum of four percent to six percentand has been lower than the annual average of middle-income countries of four percent, even as Lebanese public schools attempted to absorb hundreds of thousands Syrian refugees since 2011.  

For decades, households have been bearing a higher financial burden for education than the government. As a result, since the crisis hit and as households struggled to cover school fees, drop-out rates increased at an alarming rate; UNICEF (2022) reported that a third of young people stopped their education, while the ILO reported that only 40.4 percent among those aged 5–24 attended school during the  2020-21 school year. It was also estimated that 55,000 students moved from private to public schools in 2020-21 alone, thus adding more pressure on the under-resourced public school system. 

Moving forward: Solutions & possibilities

For the Human Development situation to be saved, it needs more attention 

The mismanagement of public affairs and governments’ lack of prioritization of Human Development for decades translated into a loose association between governmental policies, public social spending, and Human Development in Lebanon. This was especially apparent during the post-civil war reconstruction, when the social and human aspect of development received insufficient attention.  

Instead, macroeconomic stabilization formed the basis of the government’s redevelopment policies; and the gains of economic growth failed to trickle down to the general population, inciting a persistent unequal distribution of opportunities. Long-standing neglect of Human Development worsened the sting of the current crisis. Its resulting unabated deterioration signifies that opportunities and choices face an ever more volatile future in the country, even though they are essential for people in Lebanon to navigate the crisis. 

For the Human Development situation to be saved, an exclusive focus on Lebanon’s economic recovery and growth will not be enough; to fully exploit the gains of that growth, it needs to be actively directed towards Human Development. Achieving this will require the Lebanese government to address legislative, institutional, and structural gaps that have historically restricted this issue. 

This will include balancing economic and social spending in its budget through explicitly allocating expenditure towards education, health, and the labor market, and instituting more efficient planning and management for these sectors.  For growth to translate into a just distribution of opportunities and freedoms, government priorities will need to be restructured. 

“People are the real wealth of a nation. The basic objective of development is to create an enabling environment for people to enjoy long, healthy and creative lives. This may appear to be a simple truth. But it is often forgotten […].”, wrote Mahbub ul Haq, a Pakistani economist and pioneer in developing the concept of human development.

Lebanon’s government needs to remember that Lebanon’s real wealth is in its people, and Human Development should be brought to the forefront of all recovery plans.